City financial chief finally brings good news

After years of coping with deep budget holes, Surprise's financial chief told the City Council this week that the city's revenue streams are stronger than expected.

The city closed its 2012 fiscal year in June with a balance of $1.7 million in its general operating budget, exceeding revenue estimates by 2.6 percent, according to Interim Chief Financial Officer Cathy Gleason.

The 2013 fiscal year, which began on July 1, also started strong, with revenue collections surpassing estimates by 7.3 percent.

Gleason gave the City Council an update on Surprise's financial health on Tuesday. Although the numbers for the 2012-13 fiscal year are encouraging, finance officials said, an ongoing audit of management practices dating more than a decade could result in more hits to the budget. That audit is due in the beginning of the year.

The budget numbers, however, point to a promising trend, Gleason said.

"At least at this point in the year we're ending up much better than expected," Gleason said at a council workshop Tuesday.

Gleason cautioned that the budget figures have yet to be audited and that some adjustments may be made as the year goes on.

The city faced some unexpected expenses as well.

Surprise had to pay $500,000 in severance and other costs when 33 positions were eliminated in May. Some unexpected payments related to development agreements also came due.

Altogether, the city's expenses for 2012 were over estimates by 1.9 percent. Those costs still were below the extra revenue that poured into the city.

Gleason attributed the increased funds to better-than-expected income from local sales taxes, spring-training revenue and construction fees. Building permits increased by 30 percent, Gleason added, attributing some of that growth to ongoing Loop 303 construction.

"I don't know if we can continue that kind of growth to last long, but, boy, it would be nice," Gleason said.

The council and finance officials are working through a two-year "recovery" plan to rebuild the city's fiscal reserve fund and to stabilize the budget. The council members have scrutinized city finances after startling audits showed that millions of dollars had been misallocated to construct city buildings over several years.

Last year, the city discovered accounting problems that required finance officials to drain the $13 million reserve fund to almost zero. The city also faced a $3 million hole in the general fund, the operating budget that covers much of the city's services.

In June, Surprise cut $4.3 million from its budget and laid off workers.

The council members said they were relieved that revenue was coming in strong but cautioned against being overly optimistic.

"We're not out of the woods yet, that's for certain," Mayor Sharon Wolcott said.